The Bear and the Dragon

CHAPTER 38

It's all handled electronically. Once a country's treasury was in its collection of gold bricks, which were kept in a secure, well-guarded place, or else traveled in a crate with the chief of state wherever he went. In the nineteenth century, paper currency had gained wide acceptance. At first, it had to be redeemable for gold or silver- something whose weight told you its worth-but gradually this, too, was discarded, because precious metals were just too damned heavy to lug around. But soon enough even paper currency became too bulky to drag about, as well. For ordinary citizens, the next step was plastic cards with magnetic strips on the back, which moved your theoretical currency from your account to someone else's when you made a purchase. For major corporations and nations, it meant something even more theoretical. It became an electronic expression. A nation determined the value of its currency by estimating what quantity of goods and services its citizens generated with their daily toil, and that became the volume of its monetary wealth, which was generally agreed upon by the other nations and citizens of the world. Thus it could be traded across national boundaries by fiber-optic or copper cables, or even by satellite transmissions, and so billions of dollars, pounds, yen, or the new euros moved from place to place via simple keystrokes. It was a lot easier and faster than shipping gold bricks, but, for all the convenience, the system that determined a persons or a nation's wealth was no less rigid, and at certain central banks of the world, a country's net collection of those monetary units was calculated down to a fraction of a percentage point. There was some leeway built into the system, to account for trades in process and so forth, hut that leeway was also closely calculated electronically. What resulted was no different in its effect from the numbering of the bricks of King Croesus of Lydia. In fact, if anything, the new system that depended on the movement of electrons or photons from one computer to another was even more exact, and even less forgiving. Once upon a time, one could paint lead bricks yellow and so fool a casual inspector, but lying to a computerized accounting system required a lot more than that.

In China, the lying was handled by the Ministry of Finance, a bastard orphan child in a Marxist country peopled by bureaucrats who struggled on a daily basis to do all manner of impossible things. The first and easiest impossibility-because it had to be done-was for its senior members to cast aside everything they'd learned in their universities and Communist Party meetings. To operate in the world financial system, they had to understand and play by-and within-the world monetary rules, instead of the Holy Writ of Karl Marx.

The Ministry of Finance, therefore, was placed in the unenviable position of having to explain to the communist clergy that their god was a false one, that their perfect theoretical model just didn't play in the real world, and that therefore they had to bend to a reality which they had rejected. The bureaucrats in the ministry were for the most part observers, rather like children playing a computer game that they didn't believe in but enjoyed anyway. Some of the bureaucrats were actually quite clever, and played the game well, sometimes even making a profit on their trades and transactions. Those who did so won promotions and status within the ministry. Some even drove their own automobiles to work and were befriended by the new class of local industrialists who had shed their ideological straitjackets and operated as capitalists within a communist society. That brought wealth into their nation, and earned the tepid gratitude, if not the respect, of their political masters, rather as a good sheepdog might. This crop of industrialists worked closely with the Ministry of Finance, and along the way influenced the bureaucracy that managed the income that they brought into their country.

One result of all this activity was that the Ministry of Finance was surely and not so slowly drifting away from the True Faith of Marxism into the shadowy in-between world of socialist capitalism-a world with no real name or identity. In fact, every Minister of Finance had drifted away from Marxism to some greater or lesser extent, whatever his previous religious fervor, because one by one they had all seen that their country needed to play on this particular international playground, and to do that, had to play by the rules, and, oh, by the way, this game was bringing prosperity to the People's Republic in a way that fifty years of Marx and Mao had singularly failed to do.

As a direct result of this inexorable process, the Minister of Finance was a candidate, not a full member of the Politburo. He had a voice at the table, but not a vote, and his words were judged by those who had never really troubled themselves to understand his words or the world in which he operated.

This minister was surnamed Qian, which, appropriately, meant coins or money, and he'd been in the job for six years. His background was in engineering. He'd built railroads in the northeastern part of his country for twenty years, and done so well enough to merit a change in posting. He'd actually handled his ministerial job quite well, the international community judged, but Qian Kun was often the one who had to explain to the Politburo that the Politburo couldn't do everything it wanted to do, which meant he was often about as welcome in the room as a plague rat. This would be one more such day, he feared, sitting in the back of his ministerial car on the way to the morning meeting.

Eleven hours away, on Park Avenue in New York, another meeting was under way. Butterfly was the name of a burgeoning chain of clothing stores which marketed to prosperous American women. It had combined new microfiber textiles with a brilliant young designer from Florence, Italy, into fully a six percent share of its market, and in America that was big money indeed.

Except for one thing. Its textiles were all made in the People's Republic, at a factory just outside the great port city of Shanghai, and then cut and sewn into clothing at yet another plant in the nearby city of Yancheng.

The chairman of Butterfly was just thirty-two, and after ten years of hustling, he figured he was about to cash in on a dream he'd had from all the way back in Erasmus Hall High School in Brooklyn. He'd spent nearly every day since graduating Pratt Institute conceiving and building up his business, and now it was his time. It was time to buy that G so that he could fly off to Paris on a whim, get that house in the hills of Tuscany, and another in Aspen, and really live in the manner he'd earned.

Except for that one little thing. His flagship store at Park and 50th today had experienced something as unthinkable as the arrival of men from Mars. People had demonstrated there. People wearing Versace clothing had shown up with cardboard placards stapled to wooden sticks proclaiming their opposition to trade with BARBARIANS! and condemning Butterfly for doing business with such a country. Someone had even shown up with an image of the Chinese flag with a swastika on it, and if there was anything you didn't want associated with your business in New York, it was Hitler's odious logo.

"We've got to move fast on this," the corporate counsel said. He was Jewish and smart, and had steered Butterfly through more than one minefield to bring it to the brink of ultimate success. "This could kill us."

He wasn't kidding, and the rest of the board knew it. Exactly four customers had gone past the protesters into the store today, and one of them had been returning something which, she said, she no longer wanted in her closet.

"What's our exposure?" the founder and CEO asked.

"In real terms?" the head of accounting asked. "Oh, potentially four hundred." By which he meant four hundred million dollars. "It could wipe us out in, oh, twelve weeks."

Wipe us out was not what the CEO wanted to hear. To bring a line of clothing this far was about as easy as swimming the Atlantic Ocean during the annual shark convention. This was his moment, but he found himself standing in yet another minefield, one for which he'd had no warning at all.

"Okay," he responded as coolly as the acid in his stomach allowed. "What can we do about it?"

"We can walk on our contracts," the attorney advised.

"Is that legal?"

"Legal enough." By which he meant that the downside exposure of shorting the Chinese manufacturers was less onerous than having a shop full of products that no person would buy.

"Alternatives?"

"The Thais," Production said. "There's a place outside Bangkok that would love to take up the slack. They called us today, in fact."

"Cost?"

"Less than four percent difference. Three-point-six-three, to be exact, and they will be off schedule by, oh, maybe four weeks max. We have enough stock to keep the stores open through that, no problem," Production told the rest of the board with confidence.

"How much of that stock is Chinese in origin?"

"A lot comes from Taiwan, remember? We can have our people start putting the Good Guys stickers on them… and we can fudge that some, too." Not all that many consumers knew the difference between one Chinese place name and another. A flag was much easier to differentiate.

"Also," Marketing put in, "we can start an ad campaign tomorrow. 'Butterfly doesn't do business with dragons.' " He held up an illustration that showed the corporate logo escaping a dragon's fiery breath. That it looked terminally tacky didn't matter for the moment. They had to take action, and they had to do it fast.

"Oh, got a call an hour ago from Frank Meng at Meng, Harrington, and Cicero," Production announced. "He says he can get some ROC textile houses on the team in a matter of days, and he says they have the flexibility to retool in less than a month-and if we green-light it, the ROC ambassador will officially put us on their good-guy list. In return, we just have to guarantee five years' worth of business, with the usual escape clauses."

"I like it," Legal said. The ROC ambassador would play fair, and so would his country. They knew when they had the tiger by the balls.

"We have a motion on the table," the chairman and CEO announced. "All in favor?"

With this vote, Butterfly was the first major American company to walk out on its contracts with the People's Republic. Like the first goose to leave Northern Canada in the fall, it announced that a new and chilly season was coming. The only potential problem was legal action from the PRC businesses, but a federal judge would probably understand that a signed contract wasn't quite the same thing as a suicide note, and perhaps even regard the overarching political question sufficient to make the contract itself void. After all, counsel would argue in chambers-and in front of a New York jury if necessary-when you find out you're doing business with Adolf Hitler, you have to take a step back. Opposing counsel would argue back, but he'd know his position was a losing one, and he'd tell his clients so before going in.

"I'll tell our bankers tomorrow. They're not scheduled to cut the money loose for another thirty-six hours." This meant that one hundred forty million dollars would not be transferred to a Beijing account as scheduled. And now the CEO could contemplate going ahead with his order for the G. The corporate logo of a monarch butterfly leaving its cocoon, he thought, would look just great on the rudder.

We don't know for sure yet," Qian told his colleagues, "but I am seriously concerned."

"What's the particular problem today?" Xu Kun Piao asked.

"We have a number of commercial and other contracts coming due in the next three weeks. Ordinarily I would expect them to proceed normally, but our representatives in America have called to warn my office that there might be a problem."

"Who are these representatives?" Shen Tang asked.

"Mainly lawyers whom we employ to manage our business dealings for us. Almost all are American citizens. They are not fools, and their advice is something a wise man attends carefully," Qian said soberly.

"Lawyers are the curse of America," Zhang Han San observed. "And all civilized nations." At least here we decide the law, he didn't have to explain.

"Perhaps so, Zhang, but if you do business with America you need such people, and they are very useful in explaining conditions there. Shooting the messenger may get you more pleasant news, but it won't necessarily be accurate."

Fang nodded and smiled at that. He liked Qian. The man spoke the truth more faithfully than those who were supposed to listen for it. But Fang kept his peace on this. He, too, was concerned with the political developments caused by those two overzealous policemen, but it was too late to discipline them now. Even if Xu suggested it, Zhang and the others would talk him out of it.

Secretary Winston was at home watching a movie on his DVD player. It was easier than going to the movies, and he could do it without four Secret Service agents in attendance. His wife was knitting a ski sweater-she did her important Christmas presents herself, and it was something she could do while watching TV or talking, and it brought the same sort of relaxation to her that sailing his big offshore yacht did for her husband.

Winston had a multiline phone in the family room-and every other room in his Chevy Chase house-and the private line had a different ring so that he knew which one he had to answer himself.

"Yeah?"

"George, it's Mark."

"Working late?"

"No, I'm home. Just got a call from New York. It may have just started."

"What's that?" TRADER ASKED TELESCOPE.

"Butterfly-the ladies' clothing firm?"

"Oh, yeah, I know the name," Winston assured his aide. Well he might: His wife and daughter loved the place.

"They're going to bail on their contracts with their PRC suppliers."

"How big?"

"About a hundred forty."

Winston whistled. "That much?"

"That big," Gant assured him. "And they're a trend-setter. When this breaks tomorrow, it's going to make a lot of people think. Oh, one other thing."

"Yeah?"

"The PRC just terminated its options with Caterpillar-equipment to finish up the Three Gorges project. That's about three-ten million, switching over to Kawa in Japan. That's going to be in the Journal tomorrow morning."

"That's real smart!" Winston grumbled.

"Trying to show us who's holding the whip, George."

"Well, I hope they like how it feels going up their ass," SecTreas observed, causing his wife to look over at him.

"Okay, when's the Butterfly story break?"

"It's too late for the Journal tomorrow, but it'll be on CNN-FN and CNBC for damned sure."

"And what if other fashion houses do the same?"

"Over a billion, right away, and you know what they say, George, a billion here, a billion there, pretty soon you're talking real money." It had been one of Everett McKinley Dirksen's better Washington observations.

"How much before their currency account goes in the tank?"

"Twenty, and it starts hurting. Forty, and they're in the shitter. Sixty, and they're fuckin' broke. Never seen a whole country sleeping over a steam vent, y'know? George, they also import food, wheat mainly, from Canada and Australia. That could really hurt."

"Noted. Tomorrow."

"Right." The phone clicked off.

Winston picked up the controller to un-pause the DVD player, then had another thought. He picked up the mini-tape machine he used for notes and said, "Find out how much of the PRC military purchases have been executed financially-especially Israel." He clicked the STOP button, set it down, and picked the DVD controller back up to continue his movie, but soon found he couldn't concentrate on it very well. Something big was happening, and experienced as he was in the world of commerce, and now in the business of international transactions, he realized that he didn't have a handle on it. That didn't happen to George Winston very often, and it was enough to keep him from laughing at Men in Black.

Her minister didn't look very happy, Ming saw. The look on his face made her think that he might have lost a family member to cancer. She found out more when he called her in to dictate his notes. It took fully ninety minutes this time, and then two entire hours for her to transcribe them into her computer. She hadn't exactly forgotten what her computer probably did with them every night, but she hadn't thought about it in weeks. She wished she had the ability to discuss the notes' content with Minister Fang. Over the years of working for him, she'd acquired rather a sophisticated appreciation for the politics of her country, to the point that she could anticipate not only the thoughts of her master, but also those of some of his colleagues. She was in effect, if not in fact, a confidant of her minister, and while she could not counsel him on his job, if he'd had the wit to appreciate the effect of her education and her time inside his head, he might have used her far more efficiently than as a mere secretary. But she was a woman in a land ruled by men, and therefore voiceless. Orwell had been right. She'd read Animal Farm some years ago. Everyone was equal, but some were more equal than others. If Fang were smart, he'd use her more intelligently, but he wasn't, and he didn't. She'd talk to Nomuri-san about that tonight.

For his part, Chester was just finalizing an order for one thousand six hundred sixty-one high-end NEC desktops at the China Precision Machine Import and Export Corporation, which, among other things, made guided missiles for the People's Liberation Army. That would make Nippon Electric Company pretty happy. The sad part was that he couldn't rig these machine to talk as glibly as the two in the Council of Ministers, but that would have been too dangerous, if a good daydream over a beer and a smoke. Chester Nomuri, cyber-spy. Then his beeper started vibrating. He reached down and gave it a look. The number was 745-4426. Applied to the keys on a phone, and selecting the right letters, that translated in personal code to shin gan, "heart and soul," Ming's private endearment for her lover and an indication that she wanted to come over to his place tonight. That suited Nomuri just fine. So, he'd turned into James Bond after all. Good enough for a private smile, as he walked out to his car. He flipped open his shoephone, dialed up his e-mail access, and sent his own message over the 'Net, 226-234: bao bei, "beloved one." She liked to hear him say that, and he didn't mind saying it. So, something other than TV for tonight. Good. He hoped he had enough of the Japanese scotch for the apres-sex.

You knew you had a bad job when you welcomed a trip to the dentist. Jack had been going to the same one for nineteen years, but this time it involved a helicopter flight to a Maryland State Police barracks with its own helipad, followed by five minutes in a car to the dentist's office. He was thinking about China, but his principal bodyguard mistook his expression.

"Relax, boss," Andrea told the President. "If he makes you scream, I'll cap him."

"You shouldn't be up so early," Ryan responded crossly.

"Dr. North said I could work my regular routine until further notice, and I just started the vitamins she likes."

"Well, Pat looks rather pleased with himself." It had been a pleasant evening at the White House. It was always good to entertain guests who had no political agenda.

"What is it about you guys? You strut like roosters, but we have to do all the work!"

"Andrea, I would gladly switch jobs with you!" Ryan joked. He'd had this discussion with Cathy often enough, claiming that having a baby couldn't be all that hard-men had to do almost all of the tough work in life. But he couldn't joke with someone else's wife that way.

Nomuri heard his computer beep in the distance, meaning it had received and was now automatically encrypting and retransmitting the date e-mailed from Ming's desktop. It made an entertaining interruption to his current activity. It had been five days since their last tryst, and that was a long enough wait for him… and evidently for her as well, judging by the passion in her kisses. In due course, it was over, and they both rolled over for a smoke.

"How is the office?" Nomuri asked, with the answer to his question now residing in a server in Wisconsin.

"The Politburo is debating great finance. Qian, the minister in charge of our money, is trying to persuade the Politburo to change its ways, but they're not listening as Minister Fang thinks they ought."

"Oh?"

"He's rather angry with his old comrades for their lack of flexibility." Then Ming giggled. "Chai said the minister was very flexible with her two nights ago."

"Not a nice thing to say about a man, Ming," Nomuri chided.

"I would never say it about you and your jade sausage, shin gan," she said, turning for a kiss.

"Do they argue often there? In the Politburo, I mean?"

"There are frequent disagreements, but this is the first time in months that the matter has not been resolved to Fang's satisfaction. They are usually collegial, but this is a disagreement over ideology. Those can be violent-at least in intellectual terms." Obviously, the Politburo members were too old to do much more than smack an enemy over the head with their canes.

"And this one?"

"Minister Qian says the country may soon be out of money. The other ministers say that is nonsense. Qian says we must accommodate the Western countries. Zhang and the others like him say we cannot show weakness after all they-especially the Americans-have done to us lately."

"Don't they see that killing that Italian priest was a bad thing?"

"They see it as an unfortunate accident, and besides, he was breaking our laws."

Jesus, Nomuri thought, they really do think they're god-kings, don't they? "Bao bei, that is a mistake on their part."

"You think so?"

"I have been to America, remember? I lived there for a time. Americans are very solicitous to their clergy, and they place a high value on religion. Spitting on it angers them greatly."

"You think Qian is right, then?" she asked. "You think America will deny us money for this foolish action?"

"I think it is possible, yes. Very possible, Ming."

"Minister Fang thinks we should take a more moderate course, to accommodate the Americans somewhat, but he did not say so at the meeting."

"Oh? Why?"

"He does not wish to depart too greatly from the path of the other ministers. You say that in Japan people fear not being elected. Here, well, the Politburo elects its own, and it can expel those who no longer fit in. Fang does not wish to lose his own status, obviously, and to make sure that doesn't happen, he takes a cautious line."

"This is hard for me to understand, Ming. How do they select their members? How do the 'princes' choose the new 'prince'?"

"Oh, there are party members who have distinguished themselves ideologically, or sometimes from work in the field. Minister Qian, for example, used to be chief of railroad construction, and was promoted for that reason, but mainly they are picked for political reasons."

"And Fang?"

"My minister is an old comrade. His father was one of Mao's faithful lieutenants, and Fang has always been politically reliable, but in recent years he has taken note of the new industries and seen how well they function, and he admires some of the people who operate them. He even has some into his office from time to time for tea and talk."

So, the old pervert is a progressive here? Nomuri wondered. Well, the bar for that was pretty low in China. You didn't have to jump real high, but that put him in advance of the ones who dug a trench under it, didn't it?

"Ah, so the people have no voice at all, do they?"

Ming laughed at that. "Only at party meetings, and there you guard your voice."

"Are you a member?"

"Oh, yes. I go to meetings once a month. I sit in the back. I nod when others nod, and applaud when they applaud, and I pretend to listen. Others probably listen better. It is not a small thing to be a party member, but my membership is because of my job at the ministry. I am here because they needed my language and computer skills-and besides, the ministers like to have young women under them," she added.

"You're never on top of him, eh?"

"He prefers the ordinary position, but it is hard on his arms." Ming giggled.

Ryan was glad to see that he was brushing enough. The dentist told him to floss, as he always did, and Ryan nodded, as he always did, and he'd never bought floss in his life and wasn't going to start now. But at least he'd undergone nothing more invasive than a couple of X rays, for which, of course, he'd gotten the leather apron. On the whole, it had been ninety minutes torn off the front of his day. Back in the Oval Office, he had the latest SORGE, which was good enough for a whispered "damn." He lifted the phone for Mary Pat at Langley.

"They're dense," Ryan observed.

"Well, they sure as hell don't know high finance. Even I know better than this."

"TRADER has to see this. Put him on the SORGE list," POTUS ordered.

"With your day-to-day approval only," the DDO hedged. "Maybe he has a need-to-know on economics, but nothing else, okay?"

"Okay, for now," Jack agreed. But George was coming along nicely on strategic matters, and might turn into a good policy adviser. He understood high-stress psychology better than most, and that was the name of the game. Jack broke the connection and had Ellen Sumter call the SecTreas over from across the street.

So, what else do they worry about?" Chester asked. "They're concerned that some of the workers and peasants are not as happy as they should be. You know about the riots they had in the coal region."

"Oh?"

"Yes, the miners rioted last year. The PLA went in to settle things down. Several hundred people were shot, and three thousand arrested." She shrugged while putting her bra back on. "There is unrest, but that is nothing especially new. The army keeps control of things in the outlying regions. That's why they spend so much money, to keep the army reliable. The generals run the PLA's economic empire-all the factories and things-and they're good at keeping a lid on things. The ordinary soldiers are just workers and peasants, but the officers are all party members, and they are reliable, or so the Politburo thinks. It's probably true," Ming concluded. She hadn't seen her minister worry all that much about it. Power in the People's Republic decidedly grew from the barrel of a gun, and the Politburo owned all the guns. That made things simple, didn't it?

For his part, Nomuri had just learned things he'd never thought about before. He might want to make his own report on this stuff. Ming probably knew a lot of things that didn't go out as SONGBIRD material, and he'd be remiss not to send that to Langley, too.

It's like a five-year-old in a gun store," Secretary Winston observed. "These people have no business making economic decisions for a city government, much less a major country. I mean, hell, as stupid as the Japanese were a few years ago, at least they know to listen to the coaches."

"And?"

"And when they run into the brick wall, their eyes'll still be closed. That can smart some, Jack. They're going to get bit on the ass, and they don't see it coming." Winston could mix metaphors with the best of 'em, Ryan saw.

"When?" SWORDSMAN asked.

"Depends on how many companies do what Butterfly did. We'll know more in a few days. The fashion business will be the lead indicator, of all things."

"Really?"

"Surprised me, too, but this is the time for them to commit to the next season, and there's a ton of money in that business going on over there, man. Toss in all the toys for next Christmas. There's seventeen billion-plus just in that, Mark Gant tells me."

"Damn."

"Yeah, I didn't know Santa's reindeer had slanted eyes either, Jack. At least not to that extent."

"What about Taiwan?" Ryan wondered.

"You're not kidding. They're jumping into the growing gap with both feet. Figure they pick up a quarter, maybe a third, of what the PRC is going to lose. Singapore's going to be next. And the Thais. This little bump in the road will go a long way to restore the damage done to their economy a few years back. In fact, the PRC's troubles might rebuild the whole South Asian economy. It could be a swing of fifty billion dollars out of China, and it has to go somewhere. We're starting to take bids, Jack. It won't be a bad deal for our consumers, and I'll bet those countries learn from Beijing's example, and kick their doors open a notch or so. So, our workers will profit from it, too-somewhat, anyway."

"Downside?"

"Boeing's squealing some. They wanted that triple-seven order, but you wait an' see. Somebody's going to take up that slack, too. One other thing."

"Yeah?" Ryan asked.

"It's not just American companies hailing out on them. Two big Italian places, and Siemens in Germany, they've announced termination of some business with their Chinese partners," TRADER said.

"Will it turn into a general movement…?"

"Too soon to say, but if I were these guys"-Winston shook the fax from CIA-"I'd be thinking about fence-mending real soon."

"They won't do it, George."

"Then they're going to learn a nasty lesson."